BYD estimates up to 95pc dive in net profit
Warren Buffett-backed carmaker BYD said first-half profit plunged as much as 95 per cent on slumping sales of vehicles and mobile phones.
Net profit probably fell to between 121.06 million yuan (HK$145.82 million) and 363.18 million yuan in the first six months of the year, the Shenzhen-based car, battery and electronics maker said in a preliminary results announcement on Tuesday.
That represents a decline of 85 to 95 per cent from the 2.42 billion yuan profit that BYD booked in the same period a year ago. The company said the profit estimate was unaudited and was based on mainland accounting standards.
At the low end, the interim results are BYD's second-worst since it listed in Hong Kong in 2002. They follow sequentially from the company's worst six-month period, in the second half of last year, when it booked net profit of 102.24 million yuan - down 96 per cent from the second half of 2009.
The first-half profit figure may also imply a loss-making second quarter. BYD said last month that net profit in the first three months fell to 266.74 million yuan, down 84.35 per cent from a year earlier. BYD, 9.9 per cent owned by a unit of Buffett's Berkshire Hathaway, saw its shipments of cars fall 21 per cent in the first five months, to 199,900, despite aggressive price cuts launched at the start of the year.
It said its first-half profit plunge was due to the January 1 expiration of a number of government stimulus measures, including tax rebates and subsidies, that had led to record car sales growth in 2009-2010.
At the same time, new models have failed to replicate the success of the F3 sedan, formerly the best-selling passenger car on the mainland. Sales of the F3 - which sells from 52,800 yuan - fell 29 per cent in the first five months to 97,500. But they still accounted for almost half of BYD's total sales volume by units.
The S6 SUV, which sells from 89,800 yuan, shows promise, with sales of 1,500 units last month, but is far from replicating the F3's success.
BYD raised 1.42 billion yuan in a Shenzhen market listing last month.